OFFERING MEMORANDUM *Store Under Construction OLLIE’S BARGAIN OUTLET 5200 W WACO DRIVE | WACO, TX 76710 EXCLUSIVELY LISTED BY: BEN SNYDER KYLE MATTHEWS SCOTT HENARD ZACK BATES SVP & Senior Director Chairman & CEO / SVP & Regional Director Associate Vice President BROKER OF RECORD +1 (216) 503-3607 +1 (214) 692-2046 +1 (216) 503-3608 [email protected] +1 (310) 919-5757 [email protected] [email protected] [email protected] License No. 2018002569 (OH) License No. 684841 (TX) License No. 2018002393 (OH) License No. 9005919 (TX) *Store Under Construction 2 5200 W. Waco Drive. | Waco, TX OLLIE’S BARGAIN OUTLET 5200 W WACO DRIVE | WACO, TX 76710 4 INVESTMENT SUMMARY 6 PROPERTY OVERVIEW 8 TENANT PROFILE 10 LEASE ABSTRACT 14 AREA OVERVIEW OLLIE’S BARGAIN OUTLET 3 INVESTMENT SUMMARY OFFERING SUMMARY Matthews is pleased to exclusively offer a 45,217 square-foot freestanding Ollie’s Bargain Outlet situated on 3.25 acres in Waco, TX – the anchor of the Waco Metropolitan Area (MSA Population: 271,942). Ollie’s net lease is expected to commence in February 2020 and will feature 10 years of primary term with three ADDRESS 5200 W Waco Drive | Waco, TX 76710 5-year renewal options. The property has excellent access and visibility along Waco Dr (Traffic Count ±28,000 VPD). LIST PRICE $4,455,000 Ollie’s is strategically positioned directly next door to the 685,730 square-foot Richland Mall, which PRICE PSF $99 includes over 80 stores, and is anchored by Dillard’s (2 stores), JCPenney, Dick’s Sporting Goods, and Beall’s. Ollie’s benefits greatly from its proximity to three institutions of higher education, which combine for a total enrollment of nearly 30,000 students including Baylor University, the largest private university YEAR 1 CAP RATE 6.75% in Texas, which is less than 5 miles from the property. YEAR 1 NOI $300,693 The site benefits from its location within Waco’s large retail district, that attracts shoppers from surrounding counties near and far with Richland Mall being the largest enclosed regional shopping center between Dallas/Ft. Worth and Austin. Major retailers within the immediate vicinity include Walmart, Target, Sam’s TERM REMAINING ±10 Years Club, Kohl’s, HEB, Home Depot, Cinemark, TJ Maxx, Ross Dress For Less, Hobby Lobby, among many others. Furthermore, Ollie’s enjoys strong demographics with a population of 59,979 and an average RENT INCREASES $0.25/SF after year 5 household income of $69,539 within a 3-mile radius. BUILDING SIZE ±45,217 SF INVESTMENT HIGHLIGHTS ▶ Headquartered in Harrisburg, Pennsylvania, Ollie’s Bargain Outlet SITE SIZE ±3.25 AC NATIONAL TENANT — Holdings Inc. (NASDAQ: OLLI) is one of the largest retailers of closeout merchandise and excess inventory. Known for their assortment of “Good Stuff Cheap,” they offer customers a broad selection of brand name products, including housewares, food, books and stationery, bed and bath, floor coverings, toys and hardware. Originally founded in 1982, Ollie’s DEMOGRAPHICS currently operates 342 stores in 23 states. For the fiscal year ended February 2, 2019, Ollie’s reported net sales of $1.2 billion, net income of $135 million, and had net cash of $51 million. 1-MILE 3-MILE 5-MILE ▶ NET LEASE WITH CONTRACTUAL RENT INCREASES — Ollie’s net lease is expected to commence in February 2020 and features 10 years of primary term and three 5-year renewal POPULATION 8,238 59,979 140,546 options. Their net lease also contains contractual rent increases of $0.25 per square foot every five years, including in the renewal options. HOUSEHOLDS 3,763 23,505 53,312 ▶ BELOW REPLACEMENT COST — At $99 per square foot, this offering is an excellent opportunity to acquire a highly-desirable retail box at a price that is significantly below the replacement cost. HH INCOME $51,161 $69,539 $68,549 4 5200 W. Waco Drive. | Waco, TX REGIONAL MAP INVESTMENT HIGHLIGHTS CONT. ▶ STRATEGIC LOCATION — Ollie’s is strategically located next to the Richland Mall, the largest enclosed regional shopping center between Dallas/Ft. Worth and Austin. Richland Mall totals 685,730 square-feet in size, which includes over 80 stores featuring anchors of Dillard’s (2 stores), JCPenney, Dick’s Sporting Goods, and Beall’s, in addition to other name brand retailers such as H&M, Victoria’s Secret, The Buckle, Bath & Body Works/White Barn, and American Eagle. The trade area is 150-MILES comprised of 13 counties, which equates to nearly 650,000 people. Waco was also voted the #2 travel destination for 2018 by Trip Advisor, having 100-MILES experienced a tourism boom that saw over 35,000 visitors to the city on a weekly basis in 2019. 50-MILES ▶ PROXIMITY TO MAJOR UNIVERSITY — Waco is home to three institutions of higher education – Baylor University (17,000+ students), McLennan Community College (8,800+ students), and Texas State Technical College (3,800+ students), all located within a 20 minute drive to Ollie’s. Baylor is a member of the Big 12 Conference, and was rated #79 in the “National Universities” category in the 2020 “Best Colleges” rankings by U.S. News and World Reports. Baylor’s campus is located less than 5 miles from Ollie’s. Not only does this help provide additional traffic to the already robust retail corridor, but it also provides a recurring stream of new customers on an annual basis. OLLIE’S BARGAIN OUTLET ▶ STRONG DEMOGRAPHICS — Ollie’s enjoys strong demographics with a population of 59,979 and an average household income of $69,539 within a 3-mile radius. ▶ EXCELLENT ACCESS & VISIBILITY — The Property benefits from being ideally located along Waco Dr (US-84) seeing 28,000 VPD, and featuring convenient access points and excellent visibility. OLLIE’S BARGAIN OUTLET 5 PARCEL MAP PROPERTY OVERVIEW PROPERTY DESCRIPTION ▶ PROPERTY ADDRESS ▶ PARKING SPACES 5200 W Waco Road ±281 ▶ BUILDING SIZE ▶ YEAR BUILT ±45,217 SF 1986 ▶ SITE SIZE ▶ FRONTAGE & ACCESS ±3.25 AC W Waco Drive / US-84 ▶ APN ▶ TRAFFIC COUNTS *Store Under Construction 480084110001009 W Waco Drive ±28,000 VPD 6 5200 W. Waco Drive. | Waco, TX SITE PLAN LEGEND: SUBJECT PROPERTY NAP W . W A C O D R FRANKLIN AVE OLLIE’S BARGAIN OUTLET 7 TOTAL SHAREHOLDER RETURN TENANT PROFILE SINCE OLLIE’S IPO OLLIE’S BARGAIN OUTLET TENANT Ollie’s Bargain Outlet is one of America’s largest retailers of closeout merchandise and excess inventory. The 342 “semi-lovely” stores sell Ollie’s Bargain Outlet 305% merchandise of all descriptions and some beyond description. Real brands at real bargain prices in every department, from housewares Big Lots 110% to sporting goods to flooring and to food. Ollie’s buyers scour the world looking for closeouts, overstocks, package changes, manufacturer Dollar General 33% refurbished goods, and irregulars. Much of the merchandise comes direct from the finest manufacturers in Dollar Tree -48% the country and abroad. For example, if a manufacturer makes too much of an item, or changes their packaging, Ollie’s will buy the overstocked or *As of November 18,2019 old packaged items. The customer will always find famous brand name products at Ollie’s, but a lot of them could be last year’s colors, patterns, NET SALES AND SAME STORE SALES or packaging that traditional retailers won’t sell. $1,400 +18.1% CAGR $1,241 Ollie’s has also liquidated major retail centers, working very closely with $1,200 $1,077 financial institutions. When companies liquidate, the banks will often $1,000 dispose of remaining inventories and turn them into cash. Ollie’s brings $890 $762 the goods back to their stores and passes the savings to the customer. $800 $638 $600 $400 $200 $0 1982 HARRISBURG, PA OLLI 2014 2015 2016 2017 2018 SAME STORE SALES 4.4% 6.0% 3.2% 3.3% 4.2% Year NASDAQ: Headquarters Founded (S&P MidCap 400 Component) *+18.1% CAGR FROM 2014-2018 8 5200 W. Waco Drive. | Waco, TX COMPANY OVERVIEW Fast growing, extreme Total annual sales of Market cap of over $4 Share price has 342 stores in Opportunity to value retailer offering over $1.3 billion billion (compared to increased more than 23 states expand to 950 stores a broad selection of Big Lots’ market cap 300% since IPO in nationally “good cheap stuff” of $825 million) July 2015 CREDIT SNAPSHOT VS PEERS S&P COMP STORE EBIDTA MARGIN NET DEBT/(NET TENANTS DEBT TO EBITDA CREDIT RATING SALES (8Q AVG) (TTM) CASH) Ollie’s Bargain Outlet N/A 2.7% 14.0% ($77.7) 0.00x Big Lots BBB 1.1% 6.0% $495.9 1.73x Dollar General BBB 3.5% 10.2% $2,314.5 0.95x Dollar Tree BBB- 2.4% 10.1% $3,645.2 1.81x *As of February 2, 2019; $ in mil Higher Comp Store Sales + Higher Margins + ZERO Debt = Healthier Tenant OLLIE’S BARGAIN OUTLET 9 LEASE ABSTRACT *Store Under Construction LEASE ABSTRACT TENANT Ollie's Bargain Outlet, Inc. TENANT SIZE (SF) ±45,217 RENT COMMENCEMENT DATE* February 26, 2020 LEASE EXPIRATION DATE February 28, 2030 LEASE TERM (YEARS) 10 Years LEASE TERM (MONTHS) 120 Months LEASE TYPE NN REMAINING OPTIONS 3x5 years CONTRACT RENTAL RATE (YEAR 1-5) $300,693 CONTRACT RENT INCREASE (YEAR 6-10) $311,997 1ST OPTION (5 YEARS) $323,302 2ND OPTION (5 YEARS) $334,606 3RD OPTION (5 YEARS) $345,910 *Estimated 10 5200 W. Waco Drive. | Waco, TX LEASE ABSTRACT CONT. TAXES Landlord shall pay all Taxes levied against the Entire Property before the same become delinquent and shall take advantage of any and all available discounts, abatement or credits for early payment of the same.